Published on 5 Oct 2022 on Bloomberg via Yahoo Finance

Junk Market Is Only Open to Familiar Firms Offering High Yields

(Bloomberg) -- The junk bond market has become so selective that only well-known borrowers are able to sell bonds -- and even they have to offer sky-high rates. It’s a worrying sign for other issuers that aim to tap the market, and for banks on financing deals.

Regular debt issuer Royal Caribbean, for example, managed to sell $2 billion of refinancing bonds last month but had to offer yields at about 8.25% and 9.25% to satisfy investors in the two-part deal. That compares with a yield of about 4.2% for the US junk market index at the end of last year. Banks are dangling an eye-popping all-in yield in the 12% to 13% range for a sale for Canadian oilfield services company Enerflex Ltd.

The list of troubled deals is already significant. Banks funding the leveraged buyout of Citrix Systems Inc. got stuck holding $6.5 billion of the financing and recorded losses of at least $600 million on debt discounted to lure demand. A $3.9 billion loan and bond offering for telecom provider Brightspeed was pulled last week after struggling to attract investors.